Labor talks peace car makers

Prime Minister
Julia Gillard
is sending two Labor emissaries to the world’s largest car manufacturers to convince them not to abandon Australia.

Former Victorian premier
Steve Bracks
will travel to Detroit in the US to meet executives of General Motors and Ford. The Minister for Innovation, Industry, Science and Research,
Kim Carr
, will visit Toyota in Nagoya, Japan.

Their mission is to allay fears that the federal government, which has spent billions subsidising foreign car makers, will end its support.

In January, the government cut $400 million from the Green Car Innovation Fund, which subsidised efficient car technology, and $429 million from a scheme known as “cash for ­clunkers", which encouraged drivers to replace their pre-1995 vehicles with low-emission cars.

The cuts, to pay for the flood recovery package, upset the car industry and led to concerns that General Motors, Ford and ­Toyota might reduce investment from 2016-17.

Australia is one of about a dozen countries with the capacity to design and manufacture cars from scratch, in part due to large government subsidies.

The industry will receive assistance worth $5.4 billion over the next nine years, according to Senator Carr’s office.

Mr Bracks, who reviewed the future of the car industry for the Rudd government, will meet the US car giants in April. He will deliver a letter from Ms Gillard, seeking to reassure them that the government will not cut car assistance programs in the next budget.

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His visit follows crisis talks between Ms Gillard and Senator Carr and the Australian car industry after the cuts were announced.

The industry delegation, led by GM Holden chief executive Mike Devereux, who is the president of the Federal Chamber of Automotive Industries, extracted a commitment from Ms Gillard and Senator Carr that there would be no more cuts in the budget.

Senator Carr said in an interview that the car industry was disappointed with the government’s decision to wind up the Green Car Innovation Fund.

“No doubt the industry makes decisions on a long lead time and is highly competitive," ­Senator Carr said. “It does not have to spend its money here."

Car manufacturing was capital intensive and played a key role in encouraging innovation in the wider economy, he said.

The industry argued that the global car makers had made commitments to invest on the basis of the Green Car Innovation Fund.

Opposition Leader
Tony Abbott
has proposed slashing another $500 million from the Automotive Transformation scheme to pay for flood relief.